FedEx to spin off its freight trucking business

(Reuters) – FedEx on Thursday announced the expected spinoff of its less-than-truckload unit as it plans to restructure its operations and focus more on its core delivery business, sending the parcel delivery giant’s stock up 10% after hours.

Analysts believe the spinoff could unlock up to $20 billion in shareholder value while clearing the way for FedEx management to focus on restructuring, potentially boosting the long-term growth prospects of its core package operations and what will become a separate freight business.

FedEx Freight is the largest U.S. provider of less-than-truckload services, which involve multiple shipments from different customers on a single truck. The shipments are then routed through a network of service centers where they are transferred to other trucks with similar destinations.

FedEx also said second-quarter adjusted earnings fell to $0.99 billion, or $4.05 per share, from $1.01 billion, or $3.99, in the year-ago quarter, according to LSEG the result beat analysts’ average estimate of earnings of $3.90 per share.

FedEx of Memphis also lowered its full-year earnings outlook, calling for adjusted earnings of $19 to $20 per share.In September, FedEx cut the upper end of its full-year adjusted operating income to $20 to $21 per share from its previous range of $20. to $22 per share.

(Reporting by Lisa Bertlein in Los Angeles and Abhinav Parmar in Bengaluru; Editing by Alan Barona and Aurora Ellis)